Standing Committee D

[Mr. David Amess in the Chair]

Patents Bill

Gerry Sutcliffe: I beg to move,
 That—
 (1) during proceedings on the Patents Bill [Lords] the Standing Committee shall, in addition to its first meeting on Tuesday 15th June at 10.30 a.m. meet—
(a) on Tuesday 15th June at 2.30 p.m,;
(b) on Thursday 17th June at 9.25 a.m. and 2.30 p.m.;
 (2) the proceedings shall be taken in the following order namely, Clauses 1 to 5, Schedule 1, Clauses 6 to 15, Schedules 2 and 3, Clauses 16 and 17, new Clauses, new Schedules, remaining proceedings on the Bill;
 (3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5 pm on Thursday 17th June.
 My first task is to welcome you to the Chair, Mr. Amess, and I take great pleasure in doing so. I have not served under your chairmanship before, but I am sure that your leadership and skill will get us through the Bill effectively and efficiently. I also welcome all members of the Committee. 
 On Second Reading, hon. Members on both sides of the House broadly welcomed the Bill. I hope that that will put us in good stead as we approach the detailed scrutiny. I wish the Committee well in its deliberations.

James Arbuthnot: May I also say how honoured we all are to be under your chairmanship, Mr. Amess?
 A matter of huge importance was raised on Second Reading, namely whether we were talking about ''pat-tents'' or ''pay-tents''. The hon. Member for Newport, West (Paul Flynn) led us down the garden path, I regret to say; he suggested that a short 'a' would allow his constituents to get home more quickly for tea. That may be true. The Minister then told us that the pronunciation depended on which area of the country one came from, but I am afraid that that, too, is incorrect. I have now been informed that it is pronounced ''pat-tents'', because it comes from the Latin patens, meaning open. When one discloses a secret, one is making it open, and one is therefore granted letters on the opening of it. That sounds hugely convincing.

Gerry Sutcliffe: I am grateful to the hon. Gentleman, who has already started scrutinising. I will take his word on the pronunciation of patent. Those who read the report of Second Reading were even more confused, because hon. Members also talked about the parent Bill and the patient Bill. I am afraid that we caused difficulties.

James Arbuthnot: It is good to hear that the Bill is being talked about, at least in circles in which it matters, anyway.
 The other issue I want to raise is the order in which we are to consider the clauses. Most unusually, the Bill deals with patents just as a regulatory reform order is going through its stages, so the measures that the Committee is considering might be changed under regulatory reform procedures, and although measures are being considered under the order, we might change them in Committee. That is potentially unsatisfactory. A note from the Library says that it has been assured by parliamentary counsel that it is possible to refer in a Bill to legislation that does not yet exist. I find that unsatisfactory, too; it is like trying to legislate on quicksand. Will the Minister comment on the fact that two groups of people are considering the same body of law, with potential consequences for both groups?

Brian Cotter: I, too, am pleased I am to be under your chairmanship, Mr. Amess. I was tempted to go out into the sunshine this morning, but I thought, ''No, this Committee will be so lively and well run that I must attend,'' so here I am.
 Patently, we have come to a decision on whether we should say ''pat-tents'' or ''pay-tents''. I am already beginning to forget which it is; ''pay-tents'', I think. I congratulate the right hon. Member for North-East Hampshire (Mr. Arbuthnot) on having done the work on that. 
 As regards the timing in the programme motion, I expressed my concern on Second Reading that we were waiting for a key report. It had been promised to us in November, March and April; there is now talk of it arriving in the summer. It worries me that such a key report will not be available before the end of our discussions on the Bill. Apart from that, however, I am happy to proceed on the basis of the programme motion.

Gerry Sutcliffe: I am grateful to hon. Gentlemen for making their points in the way that they did. The right hon. Member for North-East Hampshire made a point about the regulatory reform order and the discussions that are taking place. I can assure hon. Members that there are no difficulties. I acknowledge and accept his concerns that there could be problems, but because the Bill has been drafted in the full light of everything that has taken place, I do not perceive that there will be any. As he rightly explained, it might be something for the House to examine; I understand that a procedure such as we are discussing has been adopted before. The provisions of the Bill that refer to the regulatory reform order are minor and will not come into force until that order does. I hope that that makes the matter clearer for him.
 The hon. Member for Weston-super-Mare (Brian Cotter) mentioned the report. I said that it would be produced in the summer and that is still the case. Although I acknowledge his concerns, I still think that we have the opportunity to scrutinise a Bill that has 
 been well consulted on. I hope that the Committee will be able to do that and will support the programme motion. 
 Question put and agreed to.

David Amess: I remind hon. Members that adequate notice should be given on amendments. As a general rule, my fellow Chairman and I do not intend to call starred amendments, including any such amendments that may be reached during an afternoon sitting.Clause 1 Methods of treatment or diagnosis

Clause 1 - Methods of treatment or diagnosis

Brian Cotter: I beg to move amendment No. 9, in clause 1, page 1, line 20, at end add— '(5) The comptroller will undertake periodic review of the efficacy of subsection 1 above in providing protection against monopolisation of scientific discoveries in humane genome technology relating to subsection (1).''.'. The amendment aims to add a new subsection to the end of the clause. It is important that I emphasise that we are talking about a periodic review, which is a response to concerns in the wider world about the issue. DNA patenting has been allowed under European, United States and Japanese law since the first DNA patents were filed 20 years ago. To date, thousands of DNA molecules, cells and proteins produced by genetic engineering have been patented. Many medicines that use patented DNA are on the market. They include treatments for cancer, anaemia, diabetes and vaccines for hepatitis B. Some patient groups, such as the Genetic Interest Group, and many of those involved in research into genetically inherited disorders, have welcomed patenting. They see it as a spur to promote research into rare inherited diseases and as a way of putting the newly acquired genetic information in the public domain. However, there are concerns that the creation of monopoly rights over genes and the royalties that are payable to patent holders may lead to prohibitive costs for users of screening services. Dr. R. G. Elles of the United Kingdom Clinical Molecular Genetics Society, writing in the Bulletin of Medical Ethics in January 1997, warned that: ''The issue of gene patenting first came to our attention through a demand for royalty payments on the use of the cystic fibrosis gene sequence from the Hospital for Sick Children in Toronto in Canada in early 1993 . . . negative effects of gene patenting can be recognised and measures need to be taken to control them.'' Therefore, many argue that rather than providing incentives for research, the patenting of living material merely restricts research by other laboratories. That is a key and important point, which the Minister should address. An EU directive on the legal protection of biotechnological inventions was translated into UK law in the Patents Regulations 2000. The new regulation was supposed to help the biotechnological sector by introducing a legal framework based around the patent system which would allow biotech companies to make appropriate decisions about
 investment and research, and encourage innovation by allowing them to benefit from the commercial risks that they were taking. None the less, hon. Members expressed concern on Second Reading about the ambiguity of the regulations and exactly what could be patented. The Minister nobly tried to quell those fears by stressing that raw, fundamental information on the genetic code was not patentable. He also stressed that it would be different if the genetic material were isolated from its natural environment by means of an invented process involving a new technical solution. Therefore, certain gene-based inventions might be patentable provided that they satisfied the normal criteria for any invention. However, Dr. Lynne Jones was less concerned about a gene that could be patented just because it had been discovered than about the simple patenting of that discovery covering all uses of that gene, regardless of whether they were known at the time of the patent. That concern was repeated a couple of years later in a report published by the Nuffield Council on Bioethics in July 2002, which concluded that companies were being granted exclusive rights over the use of genes in diagnosis, research and treatment, thus preventing other scientists from working on any aspect of that gene. The Nuffield report concluded that, as a result of that, research into AIDS and diseases such as cancer and malaria was being held up because patents on human genes were being granted too readily to pharmaceutical companies. I appreciate pharmaceutical companies' need to invest and to put a lot of money into making progress so that they can take advantage of their work, but that, none the less, is a genuine concern. When the Government were implementing the EU directive on the legal protection of biotechnological inventions in 2000, they agreed that that issue should be addressed and that they would not wish to introduce regulations that would allow a company to control a range of processes that were consequential to an initial patent, and thus prevent valid and proper applications taking place in the future. That is a key point, and, difficult as it may be to see a way around it, it has to be addressed. The Government said that they would ask the committee of the World Intellectual Property Organisation, a special UN agency, to investigate the matter. What is the outcome of that request? Will they reassure us that there is sufficient protection under UK law to ensure a proper balance between promoting innovation and ensuring that future research is not unreasonably restricted by the patents process? This is a can of worms and a difficult issue. My amendment asks for something to which the Minister could say no. However, I repeat that we would be asking the comptroller to ''undertake periodic review of the efficacy of subsection 1 . . . in providing protection against monopolisation of scientific discoveries''. I hope that the Minister will either look at that and return to it before the end of our proceedings, or accept that there is a big problem. I look forward to his response. 
 10.45 amMr. Arbuthnot: On a question of typography, I think that the amendment is meant to read ''human'' rather than ''humane'' genome technology. 
 Although I am sympathetic to the points raised by the hon. Member for Weston-super-Mare, I am not attracted to the method that he has chosen to address them. I do not believe that the Patent Office can act as a branch of the Competition Commission. It has expertise in many areas, but monopolies is not one of them. I am not quite sure what the Patent Office would do if one of the reviews suggested in the amendment found that a monopoly did exist. The purpose of the Patent Office is limited, namely to protect new inventions. Although the consequences of that protection are a monopoly in certain terms for about 20 years, it would be beyond the scope of the Patent Office to police the consequences by trying to root out monopolies.

Paul Flynn: I am sympathetic to the points that have been raised, and share the doubts of the right hon. Member for North-East Hampshire.
 This is an area of enormous importance. Pharmaceutical companies have had something of a Jekyll and Hyde career. Wonderful scientists have made miraculous breakthroughs in scientific knowledge and in discovering how our bodies work, and we do not want that to be inhibited, but the way in which the pharmaceutical companies have used patents has not been entirely for the benefit of human kind. Scientists produce their great works, which are handed over to the marketing people who behave in a way that is entirely oriented to making profits for the companies. The marketing people manipulate patents when a drug's patent is running out: the normal practice is to put part of an existing drug into a new drug, give it a new patent and a new name, and harvest the resulting sales. 
 Scientific progress on the human genome should be shared throughout the scientific community; it should not be used by one single company to obstruct development by all the other scientists in the world, but that, sadly, is likely to happen. A discovery in the field of human biology is different from an invention by a scientist as a result of his own creativity, or from an inventor who registers a unique discovery that is entirely the product of his or her imagination. Discovering a new scientific truth in the field or biology is different. Although the Patent Office cannot make the necessary decisions in such cases, it is right that we understand the potential abuses that can arise from patents on scientific discoveries, which should be available for future development by all scientists, not just one company.

Gerry Sutcliffe: We have had a short but important debate. I am grateful for the way in which the hon. Member for Weston-super-Mare moved his amendment. He will not be surprised by the comments of the right hon. Member for North-East Hampshire and my hon. Friend the Member for Newport, West
 on the mechanisms. The hon. Members for Weston-super-Mare and for Gordon (Malcolm Bruce) are clearly concerned about the scope of gene patenting and want to amend clause 1 as a result.
 It is important to set out what the clause does and does not do. It inserts a new section 4A into the Patents Act 1977 that brings together all the provisions that concern the patentability of methods of treatment and methods of diagnosis, and substances or compositions used in those methods. Subsection (1) makes clear the important fact that such medical methods cannot be patented; that includes medical methods that are biotechnological in nature or that flow from gene-based research. Subsections (2) to (4) relate to substances or compositions that are found to have a use in such a medical method. Those substances or compositions have already been susceptible to patent protection but, as I mentioned on Second Reading, the new provisions avoid the need to use a rather specialised and complex form of wording when obtaining such patent protection. The provisions do not open up patent protection into areas where none was previously available. That applies equally to biotechnological substances or compositions. 
 Having given those reassurances, I now turn to the area of gene patenting more generally. Our law in this area is governed by the European directive on the legal protection of biotechnological inventions, which was adopted in 1998 and implemented in the UK in 2000. It makes it very clear that neither DNA nor the raw information from the human genome project can be patented. That is because those are discoveries, not inventions. What can be patented, but only under certain circumstances, is genetic material that has been isolated from its natural environment. Those circumstances are where the isolation process is an inventive one that involves a new and technical solution. To put that another way, the directive—and therefore UK law—makes it clear that gene-based inventions will only be patentable if they meet all the usual criteria for any other invention. The invention must be more than just a discovery; it must be new and not obvious in the light of what has gone before, and it must provide a solution to a technical problem. 
 I am confident that we have in place with our European Union partners, a system that allows those who take important steps forward in this field to obtain patent protection without allowing patents to be taken out on the fundamental discoveries surrounding naturally occurring genetic material. We will continue to work with our European Union partners to ensure that the patent system achieves the right balance in this complex and exciting field, for the public good. 
 I hope that what I have said is of reassurance. However, if it is not, I hope that what my noble Friend the Minister for Science and Innovation said on 7 June will help. In response to the report by the House of Lords Select Committee on Genetic Databases, he said that we had promised to investigate the impact of UK law on the patenting of genetic sequences. He made it clear that the Government welcomed the findings of the resulting study carried out by the Intellectual 
 Property Institute on behalf of the Department of Trade and Industry, and that we would look at ways to take forward the issues raised by the report. The Government welcomed the report's main finding—that current law and practice is meeting the needs of both the public and private sectors in this field. 
 I hope that hon. Members will draw further comfort from that recent statement. It is an example of us keeping the commitment to get the balance right. I hope that, with those words of reassurance and comfort from my noble Friend and me, the hon. Member for Weston-super-Mare will withdraw his amendment.

Brian Cotter: It is essential that we have addressed this issue again. We must get the balance right between not stifling invention and not barring people from making necessary progress in this very complex area. I am encouraged by the Minister's statement that the Minister for Science and Innovation said something that is very much on the radar. This is a serious issue, and I sincerely hope that it does not come back to haunt us if in some manner we did not find a way to address it more precisely in the Bill. I have borne it in mind that the issue will be addressed and will be looked at on a rolling basis, although I wonder what would happen to amend the patents situation if some problem was discovered. It is important that we have raised the issue, which may be something that we will hear about from people outside the House soon and over time. I hope that it will be dealt with, if needs be, in some other way in future. On that basis, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

James Arbuthnot: I beg to move amendment No. 1, in clause 1, page 1, line 20, at end add—
 '(2) In section 1(1) of the 1977 Act, after paragraph (d) there is inserted—
''(e) the grant of a patent for it is not excluded by section 4A below;''.'.
 This technical amendment relates to the revocation of patents under section 72(1) of the Patents Act 1977. At the moment, a method of treatment is not patentable because it is deemed not to be capable of industrial application. That is wrong, because a method of treatment could be capable of industrial application. Nevertheless, it is deemed not to be so. The clause would change to the law to say that a method of treatment will not be patentable. That is a much more straightforward approach, which we welcome, but there are two consequences. First, the Patent Office ought not to grant a patent for a method of treatment. Secondly, if, through the fault of the Patent Office, or for a different reason, the Patent Office does grant a patent for a method of treatment, there has to be an opportunity for the courts to revoke it later. 
 My amendment would allow the revocation of a grant of a patent that is in breach of new section 4A. Since I tabled my amendment, the Government have tabled their own—a starred amendment, No. 15—which I am satisfied achieves the same result. I do not know whether it is in order for me to say that I would 
 be content, subject to your guidance, Mr. Amess, to make comments on the Government amendment, but I am happy with it because it seems to accept the principle of the point that I was making in my technical amendment.

David Amess: Order. It would be more in order to make fuller comment on that amendment when we come to it.

Gerry Sutcliffe: I thank the hon. Gentleman for the way he moved the amendment and for showing his ability to scrutinise the Bill effectively by identifying a problem that needs to be resolved. I apologise for tabling amendment No. 15 so late that it affected our being able to discuss it this morning. In the spirit of what the hon. Gentleman said, I hope that the Government amendment, with the different wording that we prefer, meets his requirements.
 I have nothing more to say, other than that I hope that the hon. Gentleman will withdraw his amendment in favour of ours. I acknowledge that there is concern about how the revocation procedure could take place. We do not want that to be so. 
 With your permission, Mr. Amess, we will return to this subject and give the detail an airing during our debate on schedule 2.

James Arbuthnot: I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 1 ordered to stand part of the Bill. 
 Clauses 2 and 3 ordered to stand part of the Bill.

Clause 4 - Revocation

Brian Cotter: I beg to move amendment No. 11, in clause 4, page 3, line 7, at end insert—
 '(2) In section 73 of that Act after subsection (3) there is inserted—
 (4) The comptroller shall not take action under subsections (1) or (2) later than six months after the grant of a full patent unless the action falls within section 2 subsection (4).
 (3) In section 74 of that Act in subsection (1) after ''in issue'' insert ''within six months of the grant of a full patent''.'.
 This is another issue of great importance. Hon. Members will note that the key part of the amendment is the insertion of ''six months''. Under current law, if a small business's patent is infringed, it can approach the alleged infringer and request it to pay licence fees for exploiting an invention. However, the alleged infringer may be a larger company. Many of the issues that I raised on the Floor of the House concerned the great difficulty faced on a range of issues, but particularly patents, by small businesses, which are often a David taking on a Goliath. 
 If the alleged infringer is a large company, it is likely to issue a counter legal claim questioning the validity of the small firm's patent. It is estimated that about 80 per cent. of time spent on patent cases in court is spent questioning the validity of a patent, rather than on its infringement. That is because a larger company is 
 often backed by a team of expert intellectual property lawyers. In debate in the House, I put forward the example in which a judge put up his hands in horror at the costs involved in a fairly simple case that ran for four days; it was £80,000, I think, or perhaps a lot more—a large figure, anyway. 
 Large companies are often backed by a team of experts and are able to pursue matters with intellectual property lawyers who have great expertise. Such companies have the time and money to spend hour upon hour in court presenting even the most spurious arguments to undermine the validity of the patent that they are alleged to have infringed. That is of grave concern. If a small firm loses such a case, and its patent is ruled to be invalid, it may be liable to pay the other side's court costs, which is another issue of grave concern. It is therefore unsurprising that many small firms drop their infringement cases before they even get to court. In paying for a patent in the first place, a small business should have the right to assume that the Patent Office has done its work thoroughly and has ensured that there are no other such inventions in existence before establishing a patent as valid. 
 The amendment would introduce a six-month time limit after a patent is adopted during which any party could challenge its validity. After that, the validity of the patent could no longer be questioned in court. There would be two benefits. First, the amendment would give small firms more certainty. It would reassure them that, in using the patent process, they were acquiring for their invention a protection that really meant something and that the validity of their patent would not be challenged years down the line. 
 Secondly, the amendment would encourage people to keep an eye on the patent process and on which patents had been granted in their field. According to the Patent Office, 30 per cent. of money spent on research and development is wasted on developing ideas that have already been patented. Introducing a six-month limit would encourage companies to keep a closer eye on developments in their field, and thus to save money on unnecessary R and D. I would be pleased if the Minister accepted this key amendment.

James Arbuthnot: This is a fascinating and important amendment that would have a far-reaching effect on the whole of the European patent system. As I understand it, not many countries, if any, allow patents to be valid even if it later transpires that the invention that was patented was in the public knowledge at the time it was patented.
 The amendment would therefore make a major change to the structure of the European patent system, and would, as the hon. Gentleman suggests, encourage people to keep an eye on the patent system as patents are being granted. However, it is such a major change that I wonder whether it might not be preferable to introduce it—if it is introduced at all—after consultation with industry. Comments on the Bill that I have received from those interested in patents range from those of the Patent Reform Group, which says that the whole patent system is ranged against the 
 small inventor and small company and needs root and branch reform, to those of several other operators in the field, which say that, by and large, this is a good, small, sensible Bill that ought to be passed without many changes. 
 The change in the amendment would be so large that it needs consultation before it becomes the law of the land. At present, I am not opposed to the broad thrust of the hon. Gentleman's ideas, because a degree of protection, which is not currently available, is needed by small businesses. The costs of taking out a patent and of enforcing it are so daunting as to put off many small inventors. As I said on Second Reading, something needs to be done to protect small and medium-sized enterprises. 
 Finally, it is not always the small and medium-sized enterprises that are protecting the patent. Sometimes, the big guys—the big companies—exercise control in a way that the hon. Gentleman suggested the small companies should. Enforcement in this area is a reciprocal issue—a two-way street. We need to consider changes such as the one that he proposes carefully, but after consultation with industry.

Gerry Sutcliffe: Once again, this is an important area of discussion. I am sorry to disappoint the hon. Member for Weston-super-Mare, who generally moves amendments so delightfully that one feels one ought to support them, but I shall try to explain why I think the amendment is unworkable and perhaps a little unfair.
 The right hon. Member for North-East Hampshire raised a point about the Bill itself, and on Second Reading he described it as workmanlike and less challenging than it could have been. However, the organisations to which he referred, and others, have been well consulted on the Bill, and discussion continues. If there is a need for substantial change in the light of what we say in Committee, there is always the possibility of bringing things back on Report. We are trying to achieve the best result for legislation that has not changed dramatically since 1977. Having said that, consultation has been excellent and the process has been well thought through. I am not expecting dramatic change, but if bodies still want to consult and discuss key issues with officials, that offer is on the table. 
 On amendment No. 11, a patent is not some kind of award or certificate of merit for a good idea, although it may be perceived as such. It is a powerful statutory right that allows the holder to stop other people from doing what they would otherwise be perfectly entitled to do. It goes much further than just preventing someone from deliberately copying someone else's idea: if someone patented an idea and I later developed that same idea independently, I could still be stopped from using it. It falls to Parliament to ensure that, as far as possible, those powerful rights are awarded only to, and exercised by, those who have genuinely new ideas. 
 There are two ways to do that. First, we can ensure that we have a robust and reliable patent granting system, which weeds out as many non-patentable ideas as possible; that is where the Patent Office comes in. I 
 and other Members, notably my hon. Friend the Member for Newport, West, spoke at length on Second Reading about the high quality of the work done by that organisation. 
 Secondly, we can ensure that a legal framework for patents does not, as far as possible, allow unjustified patents to remain in force and give people powerful rights to which they are not entitled. An important part of the patents system is allowing such powerful rights to be challenged, and not just during a short, arbitrary time frame after a patent has been granted. At any time during the lifetime of a patent, someone can be taken to court for infringing it; why should they be denied the defence that they were not infringing it because the patent was invalid? To deny such a defence would seriously restrict the public's legitimate right to innovate or simply to continue doing things that they are entitled to do. 
 The availability of the revocation procedure, which is open to all at any time, is an important factor in the delicate balance achieved by the patents system. It allows the removal of patents that should never have been granted and that are stopping people from doing what they should be allowed to do. That ensures that we have a patents system in which, as far as possible, only genuinely new ideas remain protected. 
 I should like to make two other important points, which I hope will help to explain why I am opposed to the amendment. First, the hon. Member for Weston-super-Mare talked about the difficulty endured by a patent holder when his patent is revoked. It is important to note that when a patent holder faces a revocation action, it is often not the end of the road for the patent. The court or the comptroller of the Patent Office will allow the patent holder to amend the patent if that could save it from revocation. The amendment must result in a valid patent, one that genuinely protects a new invention. There can surely be no argument with that. 
 Secondly, our law on the revocation of patents is harmonised with the European patent convention and applies to UK patents and European patents enforced in the UK. Adopting the amendment would mean that the UK no longer complied with the convention and that we would have to leave the European patents system. I noted from the hon. Gentleman's comments that he does not want to support what would be a disastrous move for UK businesses. I hope that on that basis, and in light of my earlier points, the hon. Gentleman will consider withdrawing his amendment.

Brian Cotter: The Minister's last point was about withdrawing things and making difficulties in the European Community. I am not one of the ilk who want to withdraw in any way from the European Community, although of course there are issues to address, even with the European Community, which does not always get it right.
 I welcome the support, qualified of course, of the right hon. Member for North-East Hampshire for the amendment. If people gave us more information, so that we could come back to the issue on Report, that would be very welcome. I appreciate that there is always a balance with this sort of thing. 
 The Minister may remember that in my previous speech on the Floor of the House I referred to some rather weird patents, one of which was to enable a ginger cat—not a black, grey or any other colour of cat—to get through a cat flap. There were 162 patents of a similar nature. I understand that one of the patents that went through was introduced by the ginger cat itself. That calls into question whether the patent should have been accepted by the Patent Office.

James Arbuthnot: The hon. Gentleman is clearly not a cat owner, and has never had his house flooded with stray cats coming in through an unguarded cat flap. I am disappointed in him.

Brian Cotter: I am sufficiently told off, and I can see that there is a problem. Perhaps we should examine that patent and see whether it could be effective. Maybe the right hon. Gentleman would like to join me and see whether we could market it.
 It is important that we keep the matter on the agenda, because there is still great concern about whether the larger firms have extra power and ability. It is important that the Patent Office is effective. Part of the reason for putting forward patents that went through in the past was to indicate that it is important that the Patent Office is vigilant and effective in ensuring that patents are watertight, that people are advised well and that things are done in proper order. We will wait to see whether more people approach us on that issue, but on the basis that it has been aired, I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 4 ordered to stand part of the Bill. 
 Clause 5 ordered to stand part of the Bill. 
 Schedule 1 agreed to. 
 Clause 6 ordered to stand part of the Bill.

Clause 7 - Restrictions on applications abroad by United Kingdom residents

Brian Cotter: I beg to move amendment No. 14, in clause 7, page 3, line 42, leave out 'national security' and insert
'the defence of the realm'.
 I want to highlight a concern of mine that others share. The amendment is clear in expressing concern that the comptroller can make directions in any circumstances in which there is a need to protect the national security interest of the United Kingdom. The phrase ''national security'' is much wider-ranging than ''defence of the realm'', and it could be interpreted as being a much more intangible test. I ask the Minister to clarify why the Government feel it necessary to make a change of wording; there must be some reason for it. I would like him to justify it, because there are concerns that we are slightly tinkering at the edges of issues of security and the protection of individual rights.

Gerry Sutcliffe: I understand the hon. Gentleman's concerns. It would be most unsatisfactory if the limitations on filing patent applications abroad that are present in section 23 of the Patents Act 1977 were made worse not better. Clause 7 is significantly deregulatory and reduces the section 23 restrictions on the filing of patent applications in other countries. Restrictions will remain only where an application relates to sensitive subject matter, which, if published, would be prejudicial to national security or to the public's safety.
 The hon. Gentleman queried the scope of ''national security'' in section 23. I believe, however, that he might be concerned about too many patent applications not being published if that term was too broad in scope. Therefore, he may be more concerned about the use of the term ''national security'' in relation to section 22 of the 1977 Act. Paragraph 7 of schedule 2 of this Bill would change ''defence of the realm'' to ''national security''. Section 22 of the 1977 Act currently permits the comptroller to give directions prohibiting or restricting the publication of information in a patent application that might be prejudicial to the defence of the realm. Naturally, I would not want the provision to be broader than is necessary to ensure proper protection in a sensitive area. It is part of the deal with the state that when a patent is applied for or granted the information in the patent application or patent will be published so that others will be aware of, and can develop their inventions, in the light of other people's ideas. That is one way in which patents support innovation. They provide a comprehensive database of the latest technological developments to which everyone can have access. In amending section 22 of the 1977 Act by changing the words ''defence of the realm'' to ''national security'', we do not intend that there should be a broadening of what information can be prohibited in dissemination. We intend only to bring the wording of the Act into line with other legislation and with modern terminology, such as that used in paragraph 3(2) of the schedule to the Export Control Act 2002. 
 In deregulating section 23, so that it applies only to sensitive applications that might be made abroad, it is sensible to use the same modern terminology as is proposed for section 22. 
 I hope that the hon. Gentleman will accept my reassurance that the measure is not about restricting and agree to withdraw his amendment.

Brian Cotter: How could I resist the Minister's reassurance? I feel great confidence now that he has reassured me doubly and trebly. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 7 ordered to stand part of the Bill. 
 Clauses 8 and 9 ordered to stand part of the Bill.

Clause 10 - Compensation of employees for certain inventions

Question proposed, That the clause stand part of the Bill.

James Arbuthnot: On Second Reading, I said that I did not understand the need for this change. The current law says that where an employee has made an invention that belongs to the employer, and as a result there is an outstanding benefit to the employer, the employee shall be entitled to compensation, provided that the existence of the patent is of outstanding benefit to the employer. The clause changes that so that the outstanding benefit refers not only to the existence of the patent but to the existence of the invention, or a combination of the two.
 On Second Reading, I said that I did not understand the basis of the existing law. I do not understand why it is necessary to provide special compensation arrangements for employees who make outstanding inventions, when it is not set down in law that employees who make outstanding marketing contributions to those inventions should get special compensation. I do not understand the current law, still less the need to extend it, thereby extending the anomalies that inevitably already exist. 
 On Second Reading, I said that if an employee makes an invention and the employer applies for a patent, the compensation provisions arise, but if an employee makes an invention and the employer decides to keep it secret, they do not. The anomalies between inventors, marketers, financiers and all the other employees who contribute to the success of an invention are already bad enough, and to extend them is bizarre. Perhaps the Minister has some frightfully good reasons for that. This is not something on which I would wish to go to the stake, but it requires considerable justification.

Gerry Sutcliffe: The hon. Gentleman is right to raise the issue. I will tell him why we considered the measure again. The principle of the outstanding benefit scheme was first adopted in the 1977 Act after great debate and consultation. I will explain some of the consultation that has taken place this time.
 Increasingly, successful UK businesses have a highly skilled work force working in technologically advanced industries, such as pharmaceuticals, telecommunications and those producing computer and office equipment. In those industries, the creativity and inventiveness of the work force is essential to the continued progress and development of companies. Sustaining the motivation and interest of such highly skilled staff is important if such businesses are to grow— 
It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order. 
 Adjourned till this day at half-past Two o'clock.